The Indian Economy is heading for troubled waters.This despite the Governments claim to the contrary. The slowdown of the reforms process and increased social sector spending done during the first term of UPA government is coming back to haunt the Government. Wasteful programs like NREGS (despite its limited success) and the defered farm loan waver scheme will have to be funded for. The increased expenditure on revised pay commission will hit the already strained finances further. Add to this the rising inflation, poor food grains production and we have a real crisis.
The alarminrg inflation, caused due to poor rains and dismal foodgrains management, has forced the RBI to tighten its monetary policy as evident in the increase of CRR recently. RBI has hit the panic button of late at the first sign of inflation and there is nothing to indicate they wont continue to do so in 2010. With the Governmnet set to increase the fuel prices at any time, the Consumer Price based inflation, which is already at a whopping 16% is likely to go north.
The Government headed by 'noted' economists like Manmohan Singh or Ahluwalia has adopted an ostrich like policy of burying their head in sand, wishing that the crisis will go away. This is a death wish.
There is no respite in sight for the common man.
